There can be a significant amount of confusion and misunderstanding when it comes to handling debt. To clear some of the confusion, we will review some of the bankruptcy basics in honor of April being Financial Literacy Month.
When an individual in New Jersey seeks to stop the financial ruin caused by a large burden of debt through bankruptcy, he or she needs to understand the bankruptcy process and which chapter to file under. In order to understand if it is best to file for personal bankruptcy under Chapter 7 or Chapter 13, an individual will need to sit down with an attorney to discuss income, types of debt carried, any previous filings and the assets an individual owns.
A few months after filing under Chapter 7, qualifying individuals will see a discharge of all unsecured debt. However, many people do not qualify for Chapter 7, and must file a Chapter 13 bankruptcy which reorganizes debt so that unsecured debt can be wiped away while secured debt is repaid in a manageable plan spread over three to five years. For many, Chapter 13 is a better long-term solution that offers more protection for the assets most critical to an individual’s continued financial wellbeing.
Understandably, consumers deciding to file for bankruptcy in New Jersey are looking to save as much money as possible in the process. Some individuals may be tempted to think that money can be saved by undertaking this process without experienced assistance. This is a huge risk. Without seeking the experience of a bankruptcy attorney, a filer risks making an error in the complicated process and then being dismissed. For most, this is a risk that cannot be afforded.
While bankruptcy can feel overwhelming, an attorney is invaluable in guiding an individual struggling with crippling debt to find a brighter financial future. No one should feel alone in their pursuit for financial health.
Source: myfoxphilly.com, “Know these bankruptcy facts before you file,” Andrew Housser, April 15, 2013